Faulconer v. Wysong and Miles Co.

• Decision Date: 31 December 2002
• Docket Number: No. COA02-291.,COA02-291.
• Parties: E.L. FAULCONER, Jr., Plaintiff, v. WYSONG AND MILES COMPANY, Defendant.
• Court: North Carolina Court of Appeals

574 S.E.2d 688

155 NC App. 598

E.L. FAULCONER, Jr., Plaintiff, v. WYSONG AND MILES COMPANY, Defendant.

No. COA02-291.

Court of Appeals of North Carolina.

December 31, 2002.

Adams Kleemeier Hagan Hannah & Fouts, by Eric H. Biesecker, Greensboro, for plaintiff appellee.

Forman Rossabi Black Marth Iddings & Slaughter, P.A., by Amiel J. Rossabi, Greensboro, for defendant appellant.

McCULLOUGH, Judge.

Plaintiff E.L. Faulconer, Jr., served as an employee of defendant Wysong & Miles Company for approximately 30 years. On or about 26 October 1981, plaintiff and defendant entered into an Amended and Restated Agreement (Agreement). This Agreement provided for plaintiff to receive supplemental retirement and death benefits from defendant in recognition of his years of faithful service, loyalty to defendant (including a non-compete provision) and required physical check-ups.

Plaintiff retired from defendant's employ in 1987. According to plaintiff, defendant was obligated to him in the sum of $2,620.80 per month under the Agreement. It appears that all payments were made up until the fall of 2000. At that point, defendant suspended its payments to plaintiff.

Plaintiff filed a complaint on 2 July 2001. According to plaintiff, as of the date of the complaint, defendant had missed 8 payments, and owed him the principal sum of $20,966.40 plus interest.

Defendant filed its answer on 10 September 2001. In its answer, defendant admitted that the two parties had entered into the aforementioned agreement. Defendant further admitted that it had failed to make the 8 payments, stating that "due to existing impracticability, Wysong has failed to make some payments to Mr. Faulconer." The focus of this appeal are the affirmative defenses included in defendant's answer. They are as follows:

FIRST AFFIRMATIVE DEFENSE

Due to the precipitous decline in the metal-working machine manufacturing industry, for which Wysong is not in any way responsible, and the non-occurrence of which event was a basic assumption on which the Agreement was made, it is impracticable for Wysong to continue making payments to Mr. Faulconer and therefore, Wysong is discharged from any such responsibility.

SECOND AFFIRMATIVE DEFENSE

Wysong repeats and realleges all of the allegations contained in the Complaint and the First Affirmative Defense as if restated herein. In addition, payments to Mr. Faulconer by Wysong, due to the precipitous decline in the metal-working machine manufacturing industry, could be made only at an excessive and unreasonable cost to Wysong.

THIRD AFFIRMATIVE DEFENSE

Wysong repeats and realleges all of the allegations contained in the Complaint and the First and Second Affirmative Defenses as if restated herein. When the parties entered into the Agreement, both parties contemplated the continued economic prosperity of the metal-working machine manufacturing industry, and did not contemplate in any way such a precipitous decline as has occurred.

Plaintiff filed a motion to strike defendant's affirmative defenses on 15 October 2001 based on the failure of defendant to set forth facts sufficient to constitute a defense. The motion stated that "[t]he claim that any decline in the metal-working machine manufacturing industry, or any commercial impracticability, discharges Defendant from its obligations under the [agreement] or in any way provide[s] a defense to Plaintiff's Complaint is not supported by applicable law."

Defendant submitted the affidavit of Thomas R. Adkisson, who was the Chief Operating Officer for defendant at the time. According to him, defendant hit hard times in the spring of 2000. Further, while other companies in the same business went bankrupt, defendant continued to pay its bills, even though it had to lay off some workers. As to the payments to plaintiff, defendant chose to suspend payments because a review of the Board minutes surrounding the execution of the agreements like plaintiff's lead him to believe that these agreements depended on defendant's business continuing to prosper, and that it was not the intent behind those agreements to have to lay off employees in order to pay plaintiff and others like him.

A hearing was held on plaintiff's motion to strike on 10 December 2001. On 12 December 2001, the Honorable William Z. Wood, Jr., ruled for plaintiff and held that "[d]efendant's affirmative defenses are insufficient in that they fail to set forth facts sufficient to constitute a defense to the claim sued upon in this cause." Defendant appeals.

Defendant presents the following question on appeal: Did the trial court err in granting plaintiff's motion to strike defendant's affirmative defenses?

Initially, we note that defendant's appeal is properly before us.

Ordinarily, Rule 4(b) of the Rules of [Appellate Procedure] precludes an appeal "from an order striking or denying a motion to strike allegations contained in pleadings." However, when a motion to strike an entire further answer or defense is granted, an immediate appeal is available since such motion is in substance a demurrer.

Bank v. Easton, 3 N.C.App. 414, 416, 165 S.E.2d 252, 254 (1969) (citation omitted). Thus, we address the merits of defendant's appeal.

I.

Defendant contends that it was error for the trial court to grant plaintiff's motion to strike his affirmative defenses, which attempt to assert the doctrine of commercial frustration, pursuant to Rule 12(f) of the N.C. Rules of Civil Procedure.

Under Rule 12(f), the trial court "may order stricken from any pleading any insufficient defense or any redundant, irrelevant, immaterial, impertinent, or scandalous matter." G.S. § 1A-1, Rule 12(f). A motion under Rule 12(f) is a device to test the legal sufficiency of an affirmative defense. See Trust Co. v. Akelaitis, 25 N.C.App. 522, 525, 214 S.E.2d 281, 284 (1975)

. "If there is any question as to whether an issue may arise, the motion [under Rule 12(f) ] should be denied." Shellhorn v. Brad Ragan, Inc., 38 N.C.App. 310, 316, 248 S.E.2d 103, 108 [disc. review denied, 295 N.C. 735, 249 S.E.2d 804 (1978) ].

Department of Transp. v. Blue, 147 N.C.App. 596, 600, 556 S.E.2d 609, 615 (2001).

In Brenner v. School House, Ltd., 302 N.C. 207, 274 S.E.2d 206 (1981), our Supreme Court discussed the defense of frustration of purpose.

The doctrine of frustration of purpose is discussed in 17 Am.Jur.2d Contracts § 401 (1964) as follows:

"Changed conditions supervening during the term of a contract sometimes operate as a defense excusing further performance on the ground that there was an implied condition in the contract that such a subsequent development should

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